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tv   Closing Bell With Maria Bartiromo  CNBC  March 7, 2012 4:00pm-5:00pm EST

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great participation in today's rally. >> the closing bell will be rung today by vice chairman of naval operations. and that is why, rightly so, so many people here are applauding. the next hour of the "closing bell" continues right now. stay with us. and it is 4:00 on wall street. do you know where your money is? hi, everybody, welcome back to the dosing bell. i'm maria bartiromo. good rally on wall street today. the markets set to close near the highs of the day as the market rebounds from the worst sell-off of the year yesterday. operate mix today of the greek bond swap deal. and employment data in the united states. all that combining to help stocks post the best gain in good three weeks. the biggest story of the day, apple, a new launch of the new ipad. coming up, we'll tell you about the device, which mobile application makers could ring up big profits from the potential
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game changer coming out of apple. things settle out for the market today. the dow tonight up 79 points. at the high, the dow was close to a 100-point gain. volume once again anemic, under 700 million shares traded here at the big board. the nasdaq and s&p both up. let's get all the action from mary thompson, our eye on the floor of the nyse right now. what fueled the rally today? >> you know what a difference a day makes. three things i think fueled the rally today. let's think about the expectations for greek debt deal to get done. they grew throughout the day. that provided a floor for the markets. after that, of course, the adp jobs report. and a report from the "wall street journal" laying out options, possible options the feds considering for qe-3. that also provided some support to the markets. even though there are questions whether qe-3 will go through.
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also today what we saw was a return to correlated trade we had seen quite frequently, about six weeks ago. we saw strength in the euro. the markets and euro moving in tandem. it was optimism about greeks jobs report, a report on the possibility of qe-3, or options they're considering for q-33. >> i thought it was interesting the banks did well today. i think you have to look at the european banks, too. >> you saw a rebound there, you saw tyler showing you some of those european banks right before the closing bell. that, of course, spilled over into the u.s. banks as well. financials were leaders, industrials were leaders, and information technology getting a lift from, i guess you could say the halo effect of the new ipad. in a return to the risk on trade, we saw small cap stocks outperforming large caps today. the russell 2000 was the biggest
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decliner. a reversal today, it was the best -- or the biggest gainer on a percentage basis. checking some story stocks that were leaders today, ge coming out and reaffirming its guidance for 2012. also talking about its expectations for growth in the middle east, as well as latin america. wells fargo, higher, too, looking to cut costs by possibly closing branches it said. also looking for selective positions from europe. american eagle outfitters, positive outlook on the second half of the year. it reported a smaller than expected loss for the quarter, maria. >> mary, good stuff. thanks so much. mary thompson with the latest there. the other big story of the day is here, after months of speculation, apple has finally unveiled the new ipad. was the device worth the wait? investors certainly did not think so. the stock actually lost ground after the device was unveiled and closed fractionally higher on the session. a lot of excitement about this new product, jon. >> yes, indeed, maria.
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what apple did is play a little defense and a little offense. they lowered the price of the ipad 2 to $400. trying to take the low end of the market. on the high end, on the offensive side, they also sort of changed the conversation around the ipad with the high resolution screen, the high resolution camera, and most important, some of the apps, particularly the new iphoto, making the case that it's more of a competitor to the windows pc. that's market expansion. what they're hoping for. we'll see if it plays out that way. >> i think it's really interesting that there's been so many angles on how to invest around this new product. number one, the company is taking market share in the tablet war. there are losers as apple takes market share. number two, you've got the suppliers. we had guests on earlier talking about qualcomm, broadcom. we don't know if they'll be the suppliers to the new ipad. >> we don't. there's another piece to this, too. about just because you're a supplier in the ipad doesn't
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mean you have any sustainable advantage. apple is doing very good at squeezing its suppliers, making sure they don't get too much profit. you've got to look beyond that. also, into some of the software makers and service providers who might see a lift, and a better chapter in their overall story from the mobile revolution that apple is trying to push. >> you know, the cash levels are being talked about. we'll talk to john calamos in a moment. he mentioned heavy, heavy cash level on the books at apple. we wonder if at some point we'll see a dividend, jon. >> yeah. and tim cook has all but said there will be some sort of action like that, after a shareholders meeting. he hinted toward it. he said a few days before that at the goldman sachs conference, asking investors to be patient. we don't know whether it will be like a one-time dividend or something bigger than that, in terms of more consistent. there's a lot of disagreement on the question like that. based on the language, it sounds like he's not merely making things like acquisitions. >> jon, thank you.
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apple's new ipad. the rest of the market did well today. the bulls are back following the biggest sell-off of the year yesterday. major averages pushing the biggest gains in three weeks today after encouraging news from the u.s. labor market as well as positive signs on the restructuring in greece. our next guest says there is still plenty of room for the market to move higher. joining me now, abby joseph cohen at goldman sachs. john calamos from calamos investments. good to see you both. abby, you've been traveling a lot, speaking to lots of big investors. you're just back from the middle east. >> absolutely. >> tell me about the risk aversety or ab tight around the world right now? are they slowly but surely coming back into this market? or are they on the sidelines? >> i think the conclusion of the major investors around the world is they are more tolerant of risk. yesterday was an exception,
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everyone nervous about greece. but by and large, the worries about europe have receded. that doesn't mean there may not be some potential issues, including how the rain yan situation is ultimately resolved. but there has been better data from the united states. there's been the sense that there is money on the sidelines. they have this coming into the markets right now. and i think many institutional investors are either coming back in, or at least preparing themselves to come back into the u.s. equity market. >> if we see some of that money from the sidelines come into this market, john, you have to believe that's going to be a big move on the upside for stocks. >> it sure is. look at the -- when you see the flows, and how many people got out of the market u the equity markets, there's a lot of money on the sidelines. so liquidity could be there. and hopefully as confidence builds, that's when you'll see the flows start to change. >> one thing that you mentioned a moment ago was valuations. i really want to get into this. even though we've got a market that's up 13% on the nasdaq
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year-to-date, up on the dow jones industrial average year-to-date, the valuations you say still look attractive. >> what's really curious about it, it seems like when the market pulls back, all the stocks go to about the same pe. and you can't tell the difference between a growth stock like apple or a real traditional value stock. and then as the market gets confidence, you see that spreading out. and so we're very bullish on growth companies here. a bit more volatile. we're better early on it. but when we look at the valuation, it's really compelling to us, because we're in the market, maria, where the market can look beyond its nose. we're talking about what's going to happen thursday, not what's happening next year. >> the opposite of how you guys look at things. >> that's right. that's exactly right. but when you start to look out, and when investors and analysts start to look further out, all
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of a sudden they say, wow, boy, that valuation has cheapened here. >> maria, you can use the mathematics of the discount model to see john's point is absolutely correct. for example, if you use a ddm, and you assume that market aversion is just about normal, what's already priced into the s&p today is a 7% decline in corporate profits for the next five years. each and every year. now, that's possible, but it's not likely. it gives you a sense of just how nervous investors have been. therefore, the sort of opportunities in equities, if in fact recession is over, and profit growth continues. >> that's a really good point. because a lot of people feel that the earnings estimates are going to come down for this year. now, obviously not 7% for five years, that's a bit of a reach. but what about this year? do you think estimates are too high? >> we think there will be some deceleration of profits. not decline, but profit growth for the gdp last year was somewhere on the order of 9% to
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10%, this year 7% to 8%. what we're all watching carefully is whether there will be margin erosion in the s&p 500. even so, if what the market is pricing in is a multi-year decline of 7%, that sort of ugly scenario is already baked in the cake. >> sounds like that's likely. how do you allocate money here. some sectors you both agree on. john, you're an owner of apple. you like technology. >> we've owned it for many, many years. just to that last point there, you know, one economic indicator comes out and the market goes crazy. you've got to look through the near term volatility. because that's really what's, i think, creating a lot of the lack of confidence in this market. but we do like technology. as a theme, we -- it's productivity enhancement, that's what's really going on. and it's consumerism, electronic
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consumerism. i'm sure they'll be lined up outside the stores for the ipad. you know, we want instant information, anywhere, anytime. that's what we want. >> sure, sure. >> and that's a very strong theme. >> she points out that, abby, you also like tech and you also like energy. john, you're underweight on the banks. appreciate both of you being on today. breaking news. we want to get to kayla tausche. >> we haven't heard much about facebook since it filed its first amendment to its s-1 a few weeks ago. a facility will come in two parts, could be north of $7.5 billion. that's because part of this is going to be a shorter term facility roughly $2.5 billion. that will cover the restricted stock units that facebook will be obligated to pay some fees on some taxes on, when those
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actually come into play during this six months following the ipo. that's the shorter term facility. the other is an expansion of the existing $2.5 billion facility that facebook has had in place for some time from its existing banks. now, of course, we know citigroup, deutsche bank and credit suisse will be added to the slate of underwriters. and additional banks could be added. but as far as the bold bracket banks, they will be expected to be part of both of these facilities as soon as we get the news of an additional filing. >> kayla, we'll be back, when you do get more of that. kayla tausche with the latest on facebook's facility. heading live to athens next on the greek debt crisis. james grant, founder and editor, joining me coming up. later on, we get the outlook for the economy and jobs market from the ceo of one of the
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largest industrial firms out there, honeywell ceo david cote with me with an exclusive.
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shares of apple turning negative after they unveiled a new version of the ipad. but then recovered in the last ten minutes of trade. the tech sector closing in positive territory. joining the barter market rally spurred by data showing growth in private sector jobs. take a look at sienna. the buildout of 4-g networks would boost demand for the networking equipment business. on the flip side, look at netfl netflix. said to be in talks with u.s. cable companies to add movie streaming services to their cable packages. that stock ended down. lastly, look at recently listed tech names. pandora losing more than a fifth of its market value.
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hedge fund investors sell out of that name. >> seema, thank you very much. seema mody. we're less than 24 hours away from the greek debt swap deadline. will enough creditors participate in the deal. let's get to michelle caruso-cabrera, she joins me on the telephone from athens tonight with the latest. michelle? >> significant news today in athens, maria. we've learned from announcements from bond holders that at least 50%, more than 50% have said they are going to agree to the deal. the 50% is a key level for the possible imposition by the greek government of what's known as cacs. if the greek government imposes them, it will force the deal on a large number of bond holders. that means the deal is more likely to happen. it also means that they're likely to trigger credit default swaps. there's still a lot of things that could go go wrong. we don't know if we'll get too
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many no-votes. there's lots of permutations here. the 50% level was crossed today. we wait now to see what happens 3:00 tomorrow, about whether or not this deal is finally successful. >> so michelle, give us a sense of what happens next. you've got the big payment due march 20th. so what happens next? >> if this deal is successful, that march 20th payment, which right now is $14.5 billion, gets reduced by half, right? to 7. -- roughly $7 billion. because they're imposing a roughly 50% hair cut on bond holders. and then remember, they're not giving bond holders cash. they're only giving them 15 cents cash. so this deal is crucial, because bottom line, the march 20th payment goes from 14.5 billion euros to only roughly 2 billion euros. that's why this deal is so crucial in the short term. in the long term, it's also
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crucial to reto piling greece's debt, hopefully getting it on a sustainable path. >> michelle, thank you so much. michelle caruso-cabrera tonight live in athens. we'll follow the developments, michelle. the federal reserve reportedly considering a new bond buying program to bolster the economy. the "wall street journal" said the plan would buy more mortgage or treasury bonds but borrow it back for short periods at lower rates. my next guest says such a plan would do more harm than good. james grant from grant's interest rate observer. and kelly evans from headquarters. good to see you, jim. thank you so much for joining us. >> good to see you. >> you say such a plan by the feds would be a wrong approach. we've had the easy money now for several years. what do you think the implications of it is? >> we should call this what it is, it is market manipulation, that's what we call it in the private sector. what the fed is doing is manhandling the structure of interest rates to the end of achieving of what it takes to be
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desirable macro outcomes. if the government would go down to the farmer's market at 14th street and fiddle with the scales, there would be an understandable outcry from the customers. but the fed and central banks the world over are in unprecedented ways of manipulating the value of what they're printing, by a ton. in the latest gambit, the fed wants to manipulate long-term interest rates lower. but in so doing, it is manipulating perceptions of risk, and it is creating a real inflation in the sense that people who want to retire in their savings, need much more cash to do it. >> and i like your latest cartoon, stick 'em up, this is a debt swap. >> yeah. >> in the latest grant interest rate observer, in terms of the inflationary story, we've been talking about the threat of inflation after a long time with this easy money. i want to get into the ecb as well, because it's not just the fed. have we seen inflation yet?
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>> there's inflation certainly in spots. obviously commodity inflation. but there's also inflation, i think, in market assets that are stimulated, to use that favorite word of the authorities, stimulated by ultra-low interest rates. for example, in the distressed debt markets, you'll find companies that have not made a profit in five years, issuing debt, as if this company were somehow soundly and demonstrably solvent. by pressing down interest rates, by repressing interest rates, the fed is in effect dulling the risk sensors of the entire marketplace. is this good? >> it's the question to ask, kelly. and the reason so many people are focused on the drawback of these record low interest rates and the fact that it's also punishing savers. >> i'm curious, it may not amount to anything, but jim, if
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the fed goes this route of sterilizing its quantitative easing, and if they do another round, what does that mean to you? why would they pursue that kind of action do you think? >> this is kind of, in football they would call it a statue of liberty play. very complicated and very tricky. what the fed is going to do is create money with which to buy long-term bonds, but it's going to take that money back at 28-day intervals or 20-odd-day intervals by in effect locking it up. it's going to borrow short, and lend long, in other words. which is in the private sector, a great way to go broke, as a bank. the fed is going to do this. it thinks -- the "wall street journal" is floating this balloon. the fed doesn't want to have us believe that it is recklessly printing money to do that, ergo the gambit of locking up the funds with which this buys the bonds. kelly, it looks like nothing more than what we've seen.
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it's the fed interposing itself between the marketplace and -- >> jim, it's an overture to pem people like you who think the feds are creating inflation. do you read a message like that and feel comforted somehow that -- >> no, i am distinctly uncomforted, kelly. the fed is creating, if not inflation, it is creating disportions. what has the fed got against the price mechanism? it's got in this country a long way over 200 years, suddenly, wherever the market sells off, we somehow have to have a fed interjection of money. >> what about the ecb? we've got the ecb allowing a three-year period where the banks can pay back the lending. what are they doing with that money? they're actually buying sovereign debt. longer term, what about the ecb action? >> the ecb is going through a kind of adolescent growth spurt. its balance sheet is positively exploding. its balance sheet is the
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equivalent of $4 trillion. it's one-third larger than the fed's. although the eurozone has an economy about 13% or 15% smaller than ours. the fed is a piker compared to what the ecb has recently been doing. i think the point is, the world over we're seeing unprecedented things. we're seeing interest rates that are lower than ever, and central banks that have never been more recklessly pro creative, to use warren buffett's words, about assets. they're printing money like matted. and people can't seem to get enough long-term bonds, because the central banks are manipulating expectations about the future of interest rates. i think it's all very dangerous. >> we can draw lessons from the depression of the 1920s, but what are the actual consequences of this continued government intervention? >> can we talk about what happened in early 1920s? ben bernanke can't stop talking
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about the '30s. but in 1920, '21, the economy fell off the cliff. nominal gdp was down 29%, wholesale prices collapsed by 40%. you know how the fed and the treasury re acted to this, the treasury balanced the budget and the fed actually raised interest rates. guess what, the depression ended. we keep on hearing this propaganda stick drum beat assertion that in order to get us out of our sorrows, the authorities, the high and mighty ones, must run immense deficits, must cut interest rates to the bone. how do they know that? they assert that. but there's a real living historical example of it doing the exact opposite. yet that depression which featured 14% of unemployment at the lows, ended, and within a year the unemployment rate was back in the 3%. today 20-somethings are desperate for an economy that does something besides sit there and slumber. they're not getting it. >> what are the alternatives? jim, you've been headaching the case for --
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>> capitalism is an alternative to what we have now. i hardly recommend it. >> actually, we all do. >> no, we don't. >> well, okay. the federal reserve may not. but let's make the case for gold. >> we ought to be discussing an intelligent move toward a sound currency, by which i mean a currency based on a standard and not at the whim and discretion of a bunch of mandarins sitting around washington, d.c. again, the constitution, article 1, section 8, delegates explicitly gives to congress the power to coin money and in the same breath, in the same clause, to fix the standard of weights and measures. we have moved so far away from that. money is this rubber band thing that we have now. what happens if we shrink yardsticks, or make pounds half pounds. >> there's been a lot of money created, the velocity of that money is not moving through the economy all that quickly.
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velocity in collateral change, it's incredibly low. that would go counter to your point about money increasing. >> the stock of so-called base money is, of course, surging. if it does not yet have an effect on measured prices, it certainly has an effect on measured asset values. you know interest rates are the traffic signals of our economy. they tell people to invest or not invest. they are green, yellow, or amber. we're green. we're constantly green. they keep on prodding people to do something with money that they otherwise might not want to do. it's called, mal-investment. we're going to see a great deal of that, it seems to me. >> do you see any catalyst to change? >> my turning bullish on the fed would be the catalyst. >> okay. jim, always great to see you. >> thank you, maria.
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>> thank you so much for joining us. jim grant here. and kelly evans at headquarters, thank you. bargains in the housing market. >> i'm diana olick in washington. home prices are still falling, now may be the best time to get in. up next, we take a look at the potential connection between morgan stanley and an alleged new york madam. control. moment.
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we saw a recovery in metals today. right along with the rest of the market. also saw move as well with oil and products. the inventory numbers for crude came in a little better than expected. one outlier on the day was natural gas, which fell about 5 cents shy of a ten-year low. the expectation, a drawdown of 82 billion cubic feet. >> bertha, thank you so much. morgan stanley confirming today that it is investigating a connection between one of its brokers and alleged manhattan madam who may have provided prostitutes to influential clients. scott? >> maria, we are shocked, shocked to hear about allegations of prostitution with a connection to wall street. but yes, morgan stanley confirms it is investigating. this is all about the case of anna gristina, arrested last month in midtown, manhattan, for
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promoting prostitution in the third degree. she allegedly ran a brothel out of an apartment building in manhattan for years and allegedly boasted about her profession. gristina was meeting with the financial adviser just before her arrest. she in fact still works there in the midtown office. a morgan stanley focus said they're investigating but it's important to note that no one at the firm has been charged. our calls to the broker's office and apartment have not been returned. so who were her clients? our nbc station in new york, wnbc, reports the nypd is reviewing the activities of a sergeant once assigned to the neighborhood, but at this point that sergeant is not suspected of wrongdoing. we're still looking into it. maria, back to you. >> scott, thank you so much. still to come on the "closing bell," we'll show you what social media game makers could
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be the big winners from the new ipad. we're checking out the ripple effects of the new product. up next, how is china's economic slowdown affecting honeywell, one of the largest industrial companies. an exclusive interview, stay with us for that. you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
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welcome back. it's been a solid year so far for companies in the diversified manufacturing space. all posting double-digit percentage gains. honeywell makes products from electronics to climate controlled systems for buildings. at an investor conference today, honeywell is now looking for first-quarter earnings per share to come in between 9 # to 98 cents a share. analysts were expecting 98 cents. strong demand for aircraft components will help the year's earnings. we bring in david cote, chief executive of honeywell, and he joins me now for an exclusive interview. great to see you, dave. >> nice to see you, too. thank you for the product placement right after the
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midtown madam. i'm sure it will get great viewership now. >> oh, my goodness. i'm not even going to go there. let's talk about business globally today. you're traveling all over the world. you've got business operations all over the world. how would you describe the importance of the international markets and what it has meant to the bottom line of honeywell? >> it's been huge for us. if you go back ten years ago, about 41% of our sales were outside the u.s. today, about 55% of our sales, and about 50% of our employees are outside the u.s. so it's been a huge part of our growth story. sales have grown about 70% overall. that gives you a sense for how much that growth outside the u.s. has meant to us. it's a big deal. >> that's really where the growth is, in the world today. >> right now, yeah. >> even though that's where the world is seeing the growth, you're seeing slowdown in some of these hot spots. we know china is slowing down, we know brazil is slowing down. what has that translated in for you? when you're on the ground in china, do you feel things are slower than a year ago?
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>> i would say there's a slowing that's occurred because of the credit markets. as you know, they started to tighten credit there. that caused somewhat of a slowing. but i can't say it affected us all that much. we were up 15% to 20% last year in china. over $2 billion a year there now. still growing pretty well. tough to tell right now because of the mix-up with lunar new year. it was a little earlier this year. so everything's a little screwy for the next three, four weeks. i fully expect it to be on a pretty decent growth path again this year. >> is that critical to profit margins? i know you said you're on track to meet the 2014 margins. what drives that? >> well, everything that we've been doing. having a great position in good industries. one honeywell focus where we brought the three cultures together. and everything we've done on our five initiatives, growth, productivity, cash, people, our enablers, we're growing with a lot of new products. we had an empty product pipeline ten years ago.
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now we've got hundreds of new products coming out all the time. and some really pretty spiffy stuff. the technologies that our guys were able to come up with is pretty impressive. >> like what? >> everything we're doing with air traffic management, just being able to see weather radar, for example. you're used to seeing the radar look. we actually have a 3-d pictorial now. you can actually get a sense of the entire cell. some of the stuff that we were able to do with refineries, where you'll be able to go directly from natural gas to producing plastics. the electric taxi that we came up in aerospace, instead of having to use the jet engine to propel the plane on the ground and use up a lot of gas, you'll be able to do it electrically with a very small engine. >> technology enabling so much in your business. >> yeah. >> europe is the wild card for the global economy. >> we've been saying for a couple of months now, europe is in recession. because we can see in our orders
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raised and the data is starting to show that. you have to worry about europe, and as a result of that, the rest of the world. there's no way that it doesn't partially drag us down, brazil, china, everything else. because everything's interconnected. so i'm very hopeful that they'll resolve their debt problem and then we'll resolve our debt problem. because those are the biggest impediments to having the economy grow again, the global economy grow again. >> is that the weak spot of the world right now? >> europe, yes, exactly. >> and asia, in terms of china, we know, has slowed. still obviously on fire. what else in asia is sort of a hot spot for you? >> vietnam is doing great. >> is that right? >> yeah, india continues to do well. australia, of all places, does well for us. we find most of southeast asia actually works pretty well for us. >> what about the u.s.? of course, we're seeing some improvements in terms of the jobs markets today, and things have turned the last couple of
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months. are you planning to hire this year? >> yes. >> you are? >> yeah. the u.s. has actually done pretty well overall. you still have to wonder, though, that between the europe debt problem and the recession that's there, that it will start to drag us down. with our own debt problem i worry where we could be in a position for the next five years we have a 2% gdp growth, 8% unemployment type of economy unless we actually start to do something here. >> what do you want to do as a company to sort of offset the stagnation of just bumping along the bottom for a while? >> be very careful on the cost side, which means you have to be very cautious in hiring. you don't just go and start hiring. you're very cautious about it. >> which is why what corporations are doing right now. >> exactly. that's why you stick with 8% unemployment for a long time, because there's not enough gdp growth to warrant hiring. second big thing is keep the new product pipeline full. the more you keep new products coming out, looking at add ja sensies, able to take share, the
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better off you'll do. and keep growing geographically everywhere. >> these are some of the schemes that have led to a decade of transformation for honeywell. >> that's true. always fun to see you, maria. >> earlier we looked at the impact the ipad will have on suppliers. up next, we'll show you which mobile app makers could score wins from apple's potential blockbuster. housing bargains at the spring selling season. that's kicking into gear. stay with us. time now for "going global" europe. >> hi, everyone. these are the stories we're watching in europe. tomorrow it is decision day for the bank of england and ecb. no change on policy is expected from either central bank. focus is still on what has changed since ltro 2. we'll also be watching and waiting for the greek psi decision. what will the takeup be. 30 major holders of greek bonds have already confirmed that they're going to be taking part in the debt swap. and we also get numbers out from
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the top four and henkle. we'll be talking to their ceos to see how they're coping in the environment. tune in to cnbc world to catch all of the world overseas. i'm louisa bojesen, "going global" with your money. with a new view of the market, you could see an investment opportunity you didn't see before. fidelity's next generation ipad app lets you see what's trending around the world, as well as what over a million fidelity customers are trading throughout the day. and advanced charting lets you customize your views and set up your own comparisons. our ipad app can help refine your strategy or even find a new one. i'm velia carboni, and i helped create fidelity's next generation ipad app. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades and explore your next investing idea.
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welcome back. breaking news right now. mary thompson has the story. >> first and foremost, the treasury is going to be selling $6 billion worth of aig stock, reducing its holdings in the company from $41.8 billion to $35.8 billion. what is not known is how this will reduce the 77% stake the government currently has in aig, because aig said it could buy back as much as $3 billion of the stock that's being offered. in addition, aig is buying back or paying off the preferred stake that the treasury had in a link to aia, leaving basically the government stake in aig, the treasury stake in aig as well as $9.5 billion loan to the new york fed. maria, back to you. >> we will know when, what the government ownership of aig is,
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mary? >> when the sale is completed. because it will all depend on how much of that $3 billion that aig buys back, that will reduce overall shares, and then you figure out the percentage afterwards. >> mary, thank you so much. meanwhile, apple ceo tim cook says of the 585,000 apps available at the apple store, more than one third are for the ipad. the faster processor, better resolution, 4-g capabilities, is a content provider's dream. creators of those apps will certainly want to take advantage of what it has to offer. we welcome to the program, with their take, martin and billy a senior analyst covering the video game industry. billy joins us from san francisco, where he's attending the game developer's conference. thank you so much for joining us, gentlemen. >> great to be here. >> thanks. >> if you're an app creator today with a social gaming company like zynga, or
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electronic arts, does the ipad, the new ipad get you excited about what you'll be able to offer? does this spur more business, more app creation? >> yeah, i think it does for really a pretty broad cross-section. even in traditional film content, i think netflix actually benefits from this, because the new ipad is going to look much more like a high-def tv. that will help them retain customers. when you talk about video games, generally speaking, a zynga game, farmville, cityville, they could go a lot richer in terms of what they could offer. certainly at some point that would mean a higher price and better experience for them. just basically anybody who owns content is going to benefit from this. >> billy, companies like ea and activisi activision, does the faster speed now create a new opportunity for new games? >> it absolutely does. it also raises the opportunity for mobile type games, which tend to be sold at 99 cents or
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for free on the apple iphone. but on the tablet, they command a much higher price. and people tend to buy more on the ipad tablet. >> so what other things can companies like zynga, martin, bring to the ipad users with this new device? >> well, i think it could bring a more visual game to it. i think at some point, 5 or ten years from now, maybe sooner, today's games are going to look like pacman did years ago. and pandora, obviously audio right now, they could add video to the platform and have sort of a concert, simulated concert whether you're adding video to the audio entertainment. it's a pretty broad opportunity. gaming would be one option. but just general entertainment, music, film, tv, you know, it's all going to look a lot better. >> so what's the big opportunity here then, billy? >> i think it's a big opportunity for some of the new companies coming -- starting up in mobile, and in social games.
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because it's time for them to evolve and to improve their revenue per customer. and i think that -- i'm here at the game developer's conference, they're working on a lot ofthat. to get people to spend more money. and things like the ipad would make -- would present a better flat form for that. i think with -- what's coming together on the development side as well as the hardware side, we're going to see an explosion, i think, in gaming going forward in the next three to five years. >> martin, from your standpoint, the new opportunity from the ipad is what? >> i'm actually focused a lot on the major content owners. that would be time warner, disney, cbs. you have this tv everywhere talked about consistently. it hasn't taken off yet. when you get an ipad device like this that is so much closer wsh all of those content owners are going to win. assuming they produce good content, you'll have more
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proximity of that to an hd tv. if they want to retain customers, for netflix retaining as opposed to growing, that's a critical juncture for them. >> gentlemen, thank you so much. we appreciate your time tonight. we'll see you soon. thank you so much. housing investors, home buyers should pay close attention. housing may have hit a bottom. where you can find spring housing bargains. diana olick will break it down when we come back on "closing bell."
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welcome back. the housing market has been showing signs of life. robert shiller said earlier on street signs. >> home prices are back to a normal level. they could just stay here. and that would be all right. right? housing is very affordable. interest rates are down. prices are down to a normal level. they haven't overshot normal. so maybe in terms of housing, this is it. this is it. >> and jamie dimon said the same thing earlier in the year when we spoke with him in san francisco. said that housing may have bottomed. but we may very well bump along the bottom for a long time.
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where are the best opportunities in terms of buying opportunities in housing as we head into the spring selling? >> here's a fun fact for you. a growing number of homeowners are beginning to think that now is actually a good time to sell. when was the last time we heard that? yes. home prices are still falling, but that's largely due to the major share of distressed properties in the market. well over a third of the market. so if you're an investor or just a regular home buyer, where do you look for the best deals? phoenix. yeah, i said it. phoenix. prices there are actually coming up according to a new report by core logic. that's thanks to a lot in the sales market. well over half that market is distressed. we're seeing bidding wars over the best properties. also dallas appears to be gaining steam. right here in d.c., we're talking about how this is surging. thanks to a relatively good local economy. what is not ripe yet. these may not be your best bets because prices are still coming down pretty dramatically as the
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number of foreclosures there arise. of course you cannot time the bottom of this market. while some folks think it's the bottom, others don't. again, if you feel like you're close enough, now's the time to get in before everyone else does. there's more on the blog realty check.cnbc.com. >> thank you. up next we'll look at the economics and earnings data. stay with us. back in a moment on "closing bell." [ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow. [ male announcer ] ducati knows it's better for xerox to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business. only hertz gives you a carfirmation. hey. this is challenger. i'll be waiting for you in stall 5.
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tune in tomorrow at 7:30 eastern for the february challenger job cut report. indeed we're continuing to monitor announced job cuts. they don't always materialize. but they can be a leading indicator in that regard. 8:30 eastern we get into continuing claims. this week doesn't look different than last week. initial claims to hover in the 350,000 area and continuing claims to hover at their current level around 3.4 million. tune in. and we'll be watching the market impact. that'll doit for us today. thank you for being with me. hope you'll follow me on twitter and on google plus.

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